What about paying tax on your savings?
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We all want things we can’t afford at the moment, whether it’s a new pair of trainers, a holiday in the sun or something more long term like your own home – and that’s where saving comes in.
Did you know that unless you stop them, your bank or building society automatically deducts tax from the interest on your savings at 20%?
They take the tax off because your interest is taxable at the ‘savings rate’ of 20%. But you can stop them if you don’t have to pay any tax because your ‘total income’, that’s the interest you get in a year plus anything you earn from working, does not exceed your personal allowance of £5,035.
To make sure your bank or building society doesn’t tax your interest if you don’t have to pay any tax you'll need to fill in a form R85. This is called 'registering'. You can download the form from the web, fill it in and give it back to your bank or building society.
It’s important to remember though that when you start earning more than your personal allowance, you'll need to tell your bank or building society so that they can start deducting tax. This is called 'de-registering', and you could be fined if you don't.
